It’s undeniably that most of the organisations are profit-oriented but there are exceptions. Some of the enterprises are established to pursue social goals, create value and doing good causes. Nowadays, we have witnessed more social enterprises being created by younger generations and most of them have the fundamental values and social objectives to meet.
Having clear social goals to address social needs and gaps is essential for a social enterprise. However, it may be inadequate to have goals alone. Sustainability is a key issue in managing a social enterprise as it heavily relies on internally generated resources and has limited funding options.
According to a report published by the Singapore Centre for Social Enterprise (raiSE) in 2017, the majority of social enterprises (69%) in Singapore are incorporated as Private Limited Companies and there were other types of legal entities such as Company Limited by Guarantee and Society. Each type of the legal entities has its benefits and disadvantages. The choice is depending on the needs of the social enterprise.
In addition, the same report revealed that more than 60% of social enterprises in Singapore are self-funded. The remaining have obtained external funding which includes grants, investments and loans. This was primarily due to the lengthy process of application for funding and the inability to meet the eligibility criteria. Given the lack of funding, the effective financial management of a social enterprise is of paramount importance.
In order to achieve financial sustainability which is one of the top priorities, the founders or the management of a social enterprise could embrace the change in technologies to better manage its finance and operations. For example, an affordable cloud-based finance/accounting solution could be adopted to streamline the tracking of financial performance of a social enterprise and be used to perform financial analysis and improve cash flow management.
If you would like to know more about establishing an enterprise to pursue social objectives or achieving financial sustainability for your social enterprise, please feel free to contact us and we will be delighted to provide you with a free consultation.